Moscow. 22 June 2007. The Board of Directors of RAO "UES of Russia" heard a report on the preparations for the AGM of the Company and noted that the Company is well prepared for the event.

The AGM of RAO "UES of Russia" will be held on 26 June 2007 in the Zelenograd Palace of Culture located in Zelenograd, an administrative district of Moscow. The meeting starts at 11 a.m. Record date: The list of shareholders entitled under the laws of the Russian Federation to take part in the AGM was made as of 11 May 2005. The Annual Report of the Company may be viewed on the website of OAO RAO "UES of Russia".

On the request of the shareholders owning the Special Purpose Holding Companies (SPHCs), the Board of Directors decided to postpone, until its next scheduled physical meeting, the consideration of the matters relating to the extraordinary general meeting on the final phase of the reorganization of RAO "UES of Russia", which is due to the need to hold additional negotiations regarding asset swaps among SPHCs.

* * *

The Board of Directors of RAO "UES of Russia", acting in the capacity of the AGM of OAO "HydroWGC"*, approved the Annual Report, the annual financial statements, the profit and loss account of the Company for 2006, and the allocation of profit for 2006 (except for RUB1.14 billion of profit previously distributed as [interim] dividends on ordinary shares of HydroWGC for Q1, H1, and 9M 2006).

In 2006, OAO "HydroWGC" had retained earnings of RUB357.74 million. It was decided to allocate RUB75.21 million to the legal reserve and RUB282.53 million to the accumulation fund. Taking into account the dividends paid [by HydroWGC] in respect of Q1, H1, and 9M 2006, the Board of Directors of RAO "UES of Russia" decided to not to pay the dividends on shares of OAO "HydroWGC" for 2006.

The Board of Directors of RAO "UES of Russia" also decided to increase the number of members on the Board of Directors of OAO "HydroWGC" from 11 to 13 persons. This is due to the forthcoming reorganization of OAO "HydroWGC" designed to achieve its intended structure and, as a consequence, the need for the state and minority shareholders of RAO "UES of Russia" and the SDCs of OAO "HydroWGC" on the Board of Directors of OAO "HydroWGC".

The following persons were elected to the Board of Directors of OAO "HydroWGC": Victor Khristenko, Minister of Industry and Energy of the Russian Federation; Anatoly Chubais, Chairman of the Management Board of RAO "UES of Russia"; Denis Askinadze, Director of the Department for State Regulation of Tariffs and Infrastructure Reforms of the Ministry of Economic Development and Trade of the Russian Federation; Boris Ayuyev, Chairman of the Management Board, OAO "UES SO-CDA"; Yuri Medvedev, Deputy Head of the Federal Agency for Federal Property Management; Dmitry Ponomaryov, Chairman of the Management Board, NP "ATS"; Andrey Rappoport, Chairman of the Management Board, OAO "UES FGC"; Seppo Remes, Senior Advisor to Chairman, Finnish Institute under the Parliament of Finland (Sitra); Vyacheslav Sinyugin, Chairman of the Management Board, OAO "HydroWGC"; Yuri Udaltsov, Member of the Management Board, RAO "UES of Russia"; Yakov Urinson, Deputy Chairman of the Management Board, RAO "UES of Russia"; Rustam Khamitov, Head of the Federal Water Resources Agency; and David Herne, Managing Director, Halcyon Advisors.

The Board approved the appointment of ZAO "PricewaterhouseCoopers Audit" as auditors of OAO "HydroWGC" for 2007.

The Board of Directors resolved to pay interim dividends of RUB1,119 million (RUB0,00793872 per ordinary share of HydroWGC) for Q1 2007.

* Under the Charter of OAO "HydroWGC", resolutions on the matters reserved for the General Meeting of shareholders are taken by the Board of Directors of RAO "UES of Russia" during the period when RAO "UES of Russia" holds 100% of voting shares in OAO "HydroWGC".

* * *

The Board of Directors approved the conclusion by RAO "UES of Russia" and ZAO "Inter RAO UES"* of an agreement for fiduciary management of shares in OAO "Severo-Zapadnaya CHPP", OAO "Kaliningradskaya CHPP-2", OAO "Sochinskaya TPP", OAO "Ivanovskie PGU", AO "Sangtudinskaya HPP-1", and OAO "Test Bed of Ivanovskaya TPP".

According to the Board resolution of 9 February 2007, the development strategy of ZAO "Inter RAO UES" provides for the consolidation of the foreign and certain Russia-based generation assets which have not been transferred to the WGCs and TGCs. The Board of Directors decided that the optimum approach to the company's restructuring would be to increase its authorized capital by transferring the shares held by RAO "UES of Russia" in AO "Sangtudinskaya HPP-1", OAO "Severo-Zapadnaya CHPP", OAO "Kaliningradskaya CHPP-2", OAO "Sochinskaya TPP", and OAO "Ivanovskie PGU" to ZAO "Inter RAO UES".

However, as the reorganization of RAO "UES of Russia" is scheduled to be completed on 1 July 2008, it appears advisable at this stage to take steps to transfer the shareholdings in the above companies and OAO "Test Bed of Ivanovskaya TPP"** to ZAO "Inter RAO UES" for fiduciary management.

Thus, this agreement will enable ZAO "Inter RAO UES" to go ahead with implementing the key elements of its strategy and start integration of the energy assets above into its business structure, as well as ensure coordinated and timely implementation of all required corporate procedures. The companies under fiduciary management will be run in accordance with the standards and in the interests of RAO "UES of Russia".

** OAO "Test Bed of Ivanovskaya TPP" has been included in the list of assets to be transferred for fiduciary management due to its technological linkage to the facilities of OAO "Ivanovskie PGU". It is planned that, at a later date, the company will be included in the list of assets to be transferred to ZAO "Inter RAO UES" in the course of RAO "UES of Russia" reorganization.

* * *

The Board of Directors of RAO "UES of Russia" approved the divestment by the Company of its interest in OAO "UES Engineering Center - Gidroproekt, Lengidroproekt, Teploelektroproekt, Firma ORGRES" (OAO "UES Engineering Center"). The mechanism to be used for the divestment of OAO "UES Engineering Center" is in full compliance with the strategy for the disposal of shares in R & D subsidiaries and dependent companies approved by the Board of Directors of RAO "UES of Russia" on 27 April 2007.

The strategy is designed to improve the efficiency of R&D companies in a competitive environment and create the conditions to develop the engineering business in the electricity industry while maintaining an optimal balance of interests of the state, shareholders and managers of the R&D entities.

As the first phase, OAO "UES Engineering Center" will be reorganized by spinning-off a wholly-owned subsidiary of RAO "UES of Russia". The spin-off company, "UES EC Realty, will receive, under the spin-off balance sheet, the immovable properties owned by OAO "UES Engineering Center". OAO "UES Engineering Center" will then enter into a building lease agreement with the spin-off company for a term of 3 to 5 years. The exception will be the properties assigned to the Lengidroproekt branch of OAO "UES Engineering Center". The legal successor of RAO "UES of Russia" in respect of "UES EC Realty" will be OAO "IDC Holding".

During the next phase, RAO "UES of Russia" will sell at least a controlling stake in OAO "UES Engineering Center" through a public auction at a price not lower than the fair market value of the shares.

During the third phase, RAO "UES of Russia" is to sell the shares in OAO "UES Engineering Center" to the company's management in such a quantity as to ensure that the managers will continue to engage in the core business. The sale price should be in line with the price set during the auction to sell the shares in OAO "UES Engineering Center".

The Board of Directors instructed the RAO UES representatives on the Board of Directors of OAO "HydroWGC" to vote for the participation of HydroWGC in the share capital of OAO "Lengidroproekt" as one of its founders. Out of the total 150,000 ordinary shares of RUB1 par value in the new company, OAO "HydroWGC" will hold 149,999 shares and its subsidiary will hold 1 share.

The Board of Directors also charged the Management Board of RAO "UES of Russia" to submit to the Board of Directors its proposals regarding the spin-off from OAO "UES Engineering Center" of a wholly-owned subsidiary of RAO "UES of Russia" and contributing 100 percent of its shares as payment for additional shares to be issued by OAO "HydroWGC" by 1 July 2008. The spin-off company will receive the facilities relating to the Lengidroproekt branch of OAO "UES Engineering Center".

* OAO "UES Engineering Center" is Russia's largest engineering company offering a comprehensive range of design and engineering services in the construction, modernization and overhaul of the heat and hydropower facilities. "UES Engineering Center" comprises 11 branches and 3 representative offices; the largest branches are those based on the former scientific and research institutes--Gidroproekt, Teploelektroproekt, Lengidroproekt, and Firma ORGRES.

* * *

The Board of Directors noted the report on the sale of the Company's non-core assets in 2006 and the schedule for the sale of non-core assets for 2007-2008 .

In accordance with the Guidelines for Reforming the Electric Power Industry, the Strategy Concept of RAO "UES of Russia" for 2003-2008, and the resolution of the Board of Directors of RAO "UES of Russia" of 6 March 2002 to divest the Company's non-core assets, the disposal of non-core assets of RAO "UES of Russia" and its subsidiaries and dependent companies are seen as a key measure to achieve cost reduction, streamline the assets structure, enhance transparency of business, and raise the Company's capitalization.

The non-core assets include the property and interests not directly related to the generation, transmission, dispatching, distribution and sales of electricity and heat, as well as the ancillary activities, such as repair business, system services, metering and accounting operations.

According to the sales procedure, non-core assets having a market value of over RUB500,000 are to be sold through an auction with the reserve price equal to the fair market value determined by an independent appraiser.

In 2006, RAO "UES of Russia" sold 11 non-core assets worth a total of RUB62 million. The largest non-core assets sold last year were the properties of the Reftinskaya TPP and Sredneuralskaya TPP sold to WGC-5 for RUB35.7 million, the immovable property in the cities of Kirishi and Krasnoyarsk.

In addition, the Board of Directors of RAO "UES of Russia" approved the divestment by the Company of its interests in the R&D companies, repair and maintenance, energy retail entities, and the sale of minority shareholdings in other companies. The terms of disposal are determined by the Board of Directors of RAO "UES of Russia" for each asset group on a case-by-case basis.

On 5 August 2006, RAO "UES of Russia" created a special unit, Project Center for Pre-sale Preparation and Disposal of Assets of RAO "UES of Russia", and formed a Commission for asset sale issues headed by Chairman of the RAO UES Management Board Anatoly Chubais.

Currently, the Project Center is given the task of addressing the sale of the shares held by RAO "UES of Russia" in energy retail companies, immovable properties owned by the RAO UES entities located in Moscow, the Moscow Region, and Saint Petersburg, shares in repair and maintenance companies, some minority shareholdings owned by RAO "UES of Russia", as well as non-core assets held by RAO "UES of Russia".

In 2007-2008, the company has plans to sell 52 energy retail companies, 7 of which was sold in May 2007 for RUB7.47 billion. Also, it is expected that RAO "UES of Russia" and its subsidiaries will sell 125 repair and maintenance companies, 12 R&D companies, immovable properties in Moscow and the Moscow Region, Saint Petersburg, Aviaenergo Co. (airline), and minority interests, including stakes in OAO "Power Machines", OAO "Russian Communal Systems" (RCS), OAO "Bashkirenergo" and OAO "Novosibirskenergo".

* * *

The Board of Directors approved the principal terms and conditions of the Share Purchase Agreement to sell the ordinary shares in OAO "WGC-4" attributable to the "government stake".

At the previous Board meeting held 25 May 2007, the Management Board was instructed to produce such conditions in the course of reviewing the updated Programme for the preparation for and issuance of additional shares in OAO "WGC-4".

The terms and conditions are necessary to implement the resolution of the Board of Directors passed on 27 April 2007 providing that new shares in the thermal generation companies are to be issued simultaneously with the sale of the "government stake" in those companies.

In light of that, it is necessary to create an effective system of undertakings and guarantees given by the strategic investor, including those intended to ensure that the WGC-4 investment programme is implemented.

According to the resolution of the Board of Directors, the total number of WGC-4 shares to be sold is to be divided into two parts. The size of the first part will be determined so as to ensure that, after its sale, RAO "UES of Russia" holds 50% plus one share in the authorized capital of WGC-4 taking into account the additional share issue. The buyer of the shareholding should own at least 25% plus one share in the company after the new share issue. The remaining part of the "government stake" in WGC-4 will make the second part of the holding. All shares intended for sale are to be sold at a price not lower than the offering price set for the new share issue of WGC-4.

The terms of payment and transfer of the parts of the shareholding are different. The first part is to be paid by the buyer in full not later than 5 working days after the official registration by the securities regulator, FSFM of Russia, of a report on the results of the additional share issue of WGC-4. RAO "UES of Russia" will transfer these shares within 5 working days of receipt of payment.

The second part of the shareholding will be transferred on condition that the buyer makes full payment for the shares. RAO "UES of Russia" may require that the buyer make payment for the second part of the shareholding within 10 working days upon receipt of a written notice to that effect. In its turn, the buyer may require that RAO "UES of Russia" transfer the second part of the shareholding in WGC-4 within 10 days upon receipt of full payment for the shares. The above terms of the Share Purchase Agreement for sale of shares in WGC-4 will come into effect upon execution by the seller, RAO "UES of Russia" and the Russian Ministry of Economic Development and Trade of a shareholders' agreement regarding the implementation of the WGC-4 investment programme. This will help ensure that all major investment projects are launched and control the proper use of proceeds of the additional share offering.

If amendments are made to the Russian laws which make it possible to place on record the undertakings of the buyer of the shares regarding the implementation of the investment programme, the WGC-4 shares may be transferred to the buyer prior to 1 January 2008.

The Board of Directors instructed the Management Board to provide for the distribution of the proceeds from the sale of the "government stake" in WGC-4 to OAO "State Holding" and OAO "HydroWGC State Holding" pro rata to the percentages of the "government stake" allotted to these holding companies in the spin-off balance sheet in the course of implementing the second phase of RAO UES reorganization.

* * *

Information in this part of the press release is not intended for distribution in Australia, Canada, Japan or the United States of America.

The Board of Directors of RAO "UES of Russia" approved the programme for the preparation and issuance of additional shares by OAO "TGC-10".*

At its meeting of 29 September 2006, the Board of Directors included TGC-10 in the list of the "second-tier" entities to issue additional shares in order to raise funds needed for the sector development.

The Board of Directors instructed the RAO UES representatives taking part in the general shareholder meeting of TGC-10 to vote FOR the approval of the following maximum amount of additional shares authorized for issuance:

• 500 million ordinary shares having a par value of RUB1.66 (115.63 percent of the TGC-10 capital before the offering, and 53.62 percent of the TGC-10 capital after the offering).

The final amount of additional shares to be issued will be determined by the Board of Directors of TGC-10 according to the need to raise RUB32 billion in equity in order to finance the company's investment programme.

The companies' shares will be offered to the general public ("open subscription") with payment for the shares to be made in cash. The Board of Directors of OAO "TGC-10" will determine the price at which the new shares will be offered, including to the persons entitled to the pre-emptive right to purchase such shares, based on the results of the book-building process and/or the results of the tender process among strategic investors. The price will be the same for potential investors and the existing shareholders of TGC-10 entitled to the pre-emptive right to purchase the new shares.

It is expected that the dual track system will be used for the TGC-10 offering. The dual track system provides for the parallel measures to prepare for a public offering and for the private placement of shares to a strategic investor The choice between the above options will be made at a later stage of the transaction depending on which of the alternatives best meets the interests of the generation company.

In the course of placement of additional shares by TGC-10, RAO "UES of Russia" is expected to sell its shares in the company attributable to the "government stake" in the capital of RAO "UES of Russia". The Management Board of RAO "UES of Russia" was given the task to submit its proposals at the next scheduled physical meeting of the Board of Directors regarding the options for the sale of shares attributable to the "government stake", including the terms and conditions of the Share Purchase Agreement.

The Board of Directors approved the reduction of the stake held by RAO "UES of Russia" in OAO "TGC-10" from 81.56 percent to at least 37.82 percent.

The Board instructed RAO UES representatives taking part in the Board meetings and general shareholder meeting of TGC-10 to vote FOR the approval of the resolutions to issue additional shares.

* * *

Having reviewed the programme for the preparation for issuance of additional shares in OAO "Yeniseyskaya TGC" (TGC-13"),* the Board of Directors of RAO "UES of Russia" instructed the Management Board to revise the programme so as to increase the share of debt capital in the total amount of funds to be raised to finance the TGC-13 investment programme. The revised share issue preparation programme is to be submitted to the Board of Directors at the next scheduled physical meeting of the Board.

The Management Board was also instructed to submit at the next Board meeting proposals on the sale of the shares in TGC-13 held by RAO "UES of Russia" which are attributable to the "government stake" in the company. The stake is to be sold simultaneously with the issuance of the additional shares.

* * *

The Board of Directors of RAO "UES of Russia" approved the measures designed to complete the creation of the intended corporate structure of OAO "TGC-11".***

The Board of Directors of RAO "UES of Russia" approved the reorganization of TGC-11 by way of merger of two regional generation companies, OAO "Omsk Generation Company" and OAO "Tomskenergo", with and into TGC-11, and the terms and conditions of the merger.

The preferred scenario for the creation of the intended structure of OAO "TGC-11" will be merger of the above RGCs with and into OAO "TGC-11". However, in the event that at least one RGC does not approve the merger with and into OAO "TGC-11", OAO "TGC-11" will carry out an additional share issue and will be structured as a corporate group. The additional shares will be exchanged for shares in OAO "Omsk Generation Company" and OAO "Tomskenergo".

The Board of Directors instructed the RAO UES representatives at the shareholder meetings of OAO "Omsk Generation Company" and OAO "Tomskenergo" to vote FOR the approval of the resolutions relating to the companies' merger with and into OAO "TGC-11".

After the shareholder meetings are held at the RGCs, the Management Board of RAO "UES of Russia", acting in the capacity of a general shareholder meeting of OAO "TGC-11", will take action on the matters relating to the Company's reorganization.

The representatives of RAO "UES of Russia" at the shareholder meeting of OAO "TGC-11" were instructed to vote FOR the approval of the maximum number of shares that TGC-11 is authorized to issue in addition to those outstanding ("additional shares authorized for issuance") at 550 billion ordinary shares, par value RUB0.01 each, worth a total of RUB550 billion, and for increasing the authorized capital of OAO "TGC-11" through issuance of the same number of additional shares. Method of placement: shares in the merging companies will be converted into the additional shares of the surviving company (OAO "TGC-11").

The Board approved the ratios for conversion of RGCs' shares into shares of TGC-11. The following quantities of shares will be converted into one ordinary share of OAO "TGC-11":

• 280/26708574 of an ordinary share in OAO "Omsk Generation Company", par value RUB1,516.40 [per share].
• 280/24459712 of a Type A preferred share in OAO "Omsk Generation Company", par value RUB1,516.40 [per share];
• 280/6745 of an ordinary share in OAO "Tomskenergo", par value RUB1 [per share];
• 280/6177 of a Type A preferred share in OAO "Tomskenergo", par value RUB1 [per share].

The conversion ratios were calculated on the basis of the report determining the market value of shares in the merging companies prepared by the investment bank "Metropol Investment Financial Company" with the participation of independent appraisers, ZAO "Rossiyskaya Otsenka" (Russian Appraisal) and OOO "KG Expert".

By way of reminder, the Board of Directors of RAO "UES of Russia" took a resolution to complete the structuring of TGC-11 at its meeting held 21 April 2006. However, during the general shareholders' meeting of OAO "Tomskenergo", YUKOS Oil Co., which then held a blocking stake in the company, voted against the consolidation of TGC-11 and its subsidiaries via a share exchange. Today's shareholder structure of OAO "Tomskenergo" makes it likely that its shareholders will approve the company's merger with and into TGC-11.

*** OAO "TGC-11" was registered with the authorities on 26 August 2005 in the city of Novosibirsk. OAO "TGC-11" is being established on the basis of the generating assets of OAO "Omskenergo" and OAO "Tomskenergo". The combined installed capacity of the entities managed by OAO "TGC-11" is 2,026 MW of electricity and 8,241 Gcal of heat.

* * *

The Board of Directors of RAO "UES of Russia" approved the mechanism designed to guarantee the implementation by the investor of the modernization programme of OAO "Eksperimentalnaya TPP".*

In order to ensure that the proceeds from the new share issue of OAO "Eksperimentalnaya TPP" are used for their designated purpose and that the company's investment programme is implemented, its shareholders will enter into a shareholders' agreement governed by English law.

According to the Board resolutions of RAO "UES of Russia" of 23 June 2006, the investments needed to modernize the Eksperimentalnaya TPP are expected to be raised through issuance of additional shares. The shares are to be placed through closed subscription (private placement). The key parameters of the new share issue were approved by the Board of Directors on 30 August 2006.

* * *

The Board of Directors of RAO "UES of Russia" approved the measures designed to complete the creation of the intended structure of OAO "TGC-10".*

On 31 December 2006, TGC-10 completed the first phase of its reorganization. Then OAO "Chelyabinsk Generation Company" and OAO "TGC-10" merged with OAO "Tyumen Regional Generation Company" which was renamed to TGC-10.

At this stage (after the creation of TGC-10 and the official registration of OAO "Kurgan Generation Company") shareholders in OAO "Kurgan Generation Company" will be invited to approve the merger of their company with TGC-10 as an operating company.

The Board of Directors of RAO "UES of Russia" approved the reorganization of TGC-10 by way of merger of OAO "Kurgan Generation Company" and the terms and conditions of the merger. The Board of Directors of RAO "UES of Russia" provided that, in the event that shareholders in Kurgan Generation Company do not approve the merger with and into OAO "TGC-10", OAO "TGC-10" will issue additional shares, which will be offered to shareholders in Kurgan Generation Company in exchange for their shares.

Accordingly, ordinary and preferred shares in OAO "Kurgan Generation Company" will be converted or exchanged for ordinary shares in TGC-10.

The Board of Directors of RAO "UES of Russia" approved the share conversion ratios for the merger of Kurgan Generation Company with and into TGC-10. The following amount of shares will be converted into one ordinary share of OAO "TGC-10" of RUB1.66 par value:

• 544814/166257 of an ordinary share and/or 544814/152258 of a Type A preferred share in OAO "Kurgan Generation Company", par value RUB7.2 [per share].

The Board of Directors of RAO "UES of Russia" also approved the procedure for payment of the additional shares in TGC-10. The following amounts of shares will be accepted as payment for one additional share in OAO "TGC-10":

• 544814/166257 of an ordinary share and/or 544814/152258 of a Type A preferred share in OAO "Kurgan Generation Company", par value RUB7.2 [per share].

Only a whole number of such shares may be used for at least one additional ordinary share in OAO "TGC-10".

The share conversion ratios were calculated based on the estimates of the fair market value of the merging companies' shares made by a consortium of independent appraisers, "Metropol Investment and Financial Company", ZAO "Rossiyskaya Otsenka" ("Russian Appraisal"), and OOO "Expert Consulting Group".

The Board of Directors of RAO "UES of Russia" instructed the representatives of RAO "UES of Russia" taking part in the shareholder meetings of TGC-10 and Kurgan Generation Company to vote FOR the approval of all resolutions required to achieve the intended corporate structure of TGC-10.

* OAO "Territorial Generation Company No. 10" (OAO "TGC-10") was registered with the Inspectorate of the Federal Tax Service of the Russia for Traktorozavodsky District, city of Chelyabinsk, on 30 March 2005. The TGC-10 comprises the generation and heating grid assets of the Kurgan Region, Tyumen Region, Chelyabinsk Region, Khanty-Mansi Autonomous Okrug and Yamalo-Nenets Autonomous Okrug. The installed capacity of the power plants of TGC-10, taking into account the generation capacity of Kurgan Generation Company, is 3,129 MW of electricity and 14,675 Gcal/h of heat.

* * *

The Board of Directors adopted some resolutions on the acquisition by RAO "UES of Russia" of additional shares in OAO "Power Machines".

The capital increase at OAO "Power Machines" is intended to raise funds needed to finance the company's investment programme. The Board of Directors of RAO "UES of Russia" considered the key terms and conditions of the share issue at its meeting of 30 March 2007. The Power Machines' development programme will be primarily financed through two new share issues worth a total of nearly USD450 million.

If the strategic shareholders approve the issuance of new shares, the first share offering may take place the second half of 2007. OAO "Power Machines" expects to issue 1,492 million new ordinary shares, par value RUB0.01 each.

At its previous meeting held on 25 May, the Board of Directors of RAO "UES of Russia" approved the acquisition by RAO "UES of Russia" of additional shares in Power Machines under a pre-emptive right pro rata to the interest of RAO "UES of Russia" in Power Machines. Also, the Board of Directors approved the purchase of additional shares in Power Machines in the amount proportional to the stake in Power Machines held by TGC-1, and the remaining shares that are not sold, if any. The number of such shares will be calculated as the product of the total number of unissued shares and the consolidated number of shares of OAO "Power Machines" held by RAO "UES of Russia" and RAO UES entities in the total number of Power Machines shares owned by strategic investors (Siemens AG, Burbot Limited, RAO "UES of Russia", and TGC-1).

At today's meeting, the Board of Directors resolved that the price of the additional shares to be purchased should be equal to the placement price which will be set by the Power Machines Board after the expiration of the pre-emptive right to purchase the additional shares. However, the value of shares to be acquired may not make 2 percent or more of the book value of assets of RAO "UES of Russia".

As provided by the Board resolution of 30 March 2007, before OAO "Power Machines" completes the issuance of its new shares, RAO "UES of Russia" is to purchase from TGC-1 its stake in Power Machines. At today's meeting, the Board of Directors approved the terms of the deal: RAO "UES of Russia" will purchase 185,639,860 shares in Power Machines from TGC-1 for RUB795,965,000.

Under Russian law, this transaction is subject to antitrust clearance by the Federal Antimonopoly Service of Russia, as after the transaction, RAO "UES of Russia" will build up a 25 percent-plus stake in Power Machines. RAO "UES of Russia" is in the process of obtaining such clearance.

* Power Machines Group is Russia's leading manufacturer and supplier of equipment for hydroelectric, thermal, gas and nuclear power plants, electric power transmission and distribution equipment. RAO "UES of Russia" holds a 22.43 percent interest in OAO "Power Machines". Taking into account the Power Machines shares held by OAO "TGC-1", RAO "UES of Russia" has built up a blocking stake (25% plus one share) in OAO "Power Machines".

* * *

The Board of Directors considered a number of matters relating to the reorganization of OAO "TGC-6" through merger of OAO "Dzerzhinskaya CHPP" and OAO "Penzenskaya Heat Grid Company" with and into OAO "TGC-6".

To date, OAO "TGC-6" has completed the creation of its intended corporate structure. On 1 March 2007, Nizhny Novgorod Generation Company, Vladimir Generation Company, Penza Generation Company, Ivanovo Generation Company, Mordovia Generation Company, and Mordovia Heating Grid Company merged with and into TGC-6.

As a result of the reorganization, according to the transfer deeds of the regional generation companies that merged with it, TGC-6 became the holder of 100 percent shares in OAO "Dzerzhinskaya CHPP" and OAO "Penza Heating Grid Company".

However, the TGC-6 development strategy for the period until 2011 approved by its Board of Directors on 31 July 2006 does not provide for the creation of wholly-owned subsidiaries. That is why it was decided to merge OAO "Dzerzhinskaya CHPP" and OAO "Penza Heating Grid Company" with TGC-6, which will ensure adherence to the principles laid down in the company's strategy, and increase its assets without changing its capital structure. This, in turn, will significantly increase the manageability and transparency of TGC-6, which will have a positive impact on its investment attractiveness.

The merger of OAO "Dzerzhinskaya CHPP" and OAO "Penza Heating Grid Company" with TGC-6 will be effected by way of conversion of their shares into additional shares in TGC-6.

According to the conversion ratios approved by the Board of Directors of RAO "UES of Russia", the following amounts of shares will be converted into one ordinary share in OAO "TGC-6":

• 100 percent shares in OAO "Dzerzhinskaya CHPP" (1,397,635,565 shares);
• 100 percent shares in OAO "Penza Heating Grid Company" (997,107,000 shares).

For the share conversion, OAO "TGC-6" will issue 2 additional ordinary shares worth a total of RUB0.02.

The peculiarity of this scheme is that the proposed reorganization will have no impact on the capital structure of TGC-6. TGC-6 holds 100 percent shares in the companies that are to merge with it. There will be no actual conversion of shares in OAO "Dzerzhinskaya CHPP" and OAO "Penza Heating Grid Company" and, accordingly, no new shares of TGC-6 will be issued. The shares of the merging companies will be cancelled.

However, in order to comply with the Russian legislation, it is necessary to specify the provisions governing the share conversion procedure in the Merger Agreement and adopt a resolution to increase the authorized capital of TGC-6 by issuing additional shares and converting the shares in OAO "Dzerzhinskaya CHPP" and OAO "Penza Heating Grid Company" into those new shares.

The Board of Directors instructed the representatives of RAO "UES of Russia" attending the Board meeting of OAO "TGC-6" and the general meeting of shareholders to vote for the reorganization of TGC-6 through merger of OAO "Dzerzhinskaya CHPP" and OAO "Penza Heating Grid Company" with and into TGC-6, and for the approval of the Merger Agreement.